How to design an EU budget

The forthcoming negotiations over the EU’s long-term budget will be conditioned by Brexit. In the face of the U.K.’s decision to leave the Union, the so-called multiannual financial framework — which sets the bloc’s priorities for a seven-year period — will need to be redesigned in order to address the concerns and expectations of our citizens.

There are some policy areas, now ineffectively provided by national governments, that would be better addressed at the EU level.

In order to ensure a more efficient use of the taxes paid by our citizens and companies, the EU budget must be reoriented to finance and manage truly European public goods. Traditional tools, such as the cohesion funds used to reduce regional disparity within the EU, should also be improved to ensure taxpayers are getting the best value for their money.

Larger migration flows and the resulting political crises call for an enhanced European response at our common borders.

Coordinated action will also be needed to effectively develop our internal and external security capabilities, including cybersecurity and the fight against terrorism. More generally, we should strengthen European cooperation in the defense sector in order to take advantage of our sizable synergies in this arena.

Eligibility criteria should consider not just GDP per capita but also social indicators and those reflecting solidarity.

In addition to this focus on borders, security and defense, we must strengthen the integration and convergence of our economies, with a coordinated approach that ensures environmental sustainability.

Common investments, especially cross-border initiatives, can spur growth potential and contribute to the completion of the single market, especially when it comes to the EU’s innovation, digital and energy unions.

Common resources should also be channeled to programs focused on young and future generations, reinforcing cross-country mobility, transnational cultural initiatives and the development of a true sense of European citizenship and identity.

The redesigned budget must still provide for a strong financing of the cohesion policy, but its effectiveness will have to be improved. The key will be to concentrate on the financing of investments and reforms that increase growth, competitiveness and productivity in weaker regions.

The cohesion policy is still needed to reduce socioeconomic disparities and stimulate economic convergence, as well as the smooth functioning of the EU’s internal market. But there’s much that can be improved. Administrative procedures should be simplified, and an outcome-oriented approach should be favored over a pure spending-oriented one.

Eligibility criteria should consider not just GDP per capita but also social indicators and those reflecting solidarity.

At the national level, it would therefore make sense to use structural funds also to finance projects that implement the country-specific recommendations — the yearly economic and fiscal goals the EU sets for itself and its members — during each European semester.

By better using existing funds, the EU budget can foster economic convergence and contribute to a strong economic and monetary union. While fully respecting national ownership, the efficient design of the projects could take advantage of technical expertise provided by the European Commission and the European Investment Bank.

In the face of the current challenges, Italy and Germany would be open to considering a limited increase of the EU-budget, under two conditions. First, it is reoriented to finance the above mentioned European public goods — thus allowing for the overall tax burden on citizens not to increase, and actually to be slightly reduced; second, it provides for a more efficient cohesion policy.

Peter Altmaier is the German finance minister. Pier Carlo Padoan is the Italian finance minister.

Original Article

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